USA Gymnastics President Steve Penny resigns

The resignation came amid growing outrage over the way USA Gymnastics responded to sexual abuse complaints against coaches and other members.

Mark Alesia, Tim Evans, and Marisa Kwiatkowski

IndyStar

Embattled USA Gymnastics President Steve Penny resigned Thursday in a move observers hailed as a key step in changing a culture critics say led one of America's most popular and lucrative Olympic organizations into a sex-abuse scandal.

The resignation of Penny, who has headed the Indianapolis-based nonprofit since 2005, came after the United States Olympic Committee board called for him to step down last week in the wake of an eight-month IndyStar investigation into child sexual abuse allegations in the sport.

“The Board believes this change in leadership will help USA Gymnastics face its current challenges and implement solutions to move the organization forward in promoting a safe environment for its athletes at all levels," said Paul Parilla, chairman of the USA Gymnastics board of directors, in a statement.

Responding to Penny's resignation, the USOC released a statement from board Chairman Larry Probst: "Today's announcement will hopefully allow USA Gymnastics to shift its attention to the future with a secure environment for its athletes and continued success in competition.”

Penny's resignation came amid growing outrage over the way he and other top USA Gymnastics officials responded to sexual abuse complaints against coaches and other members.

IndyStar reported in August on policies under which the organization did not report all allegations of child abuse to authorities. In September, the investigation first revealed sexual abuse allegations against longtime Team USA doctor Larry Nassar. The investigation revealed in December that more than 368 gymnasts had alleged abuse by coaches and other authority figures over two decades.

In recent weeks, the controversy spilled into Congress, where Sen. Dianne Feinstein and 15 other lawmakers introduced legislation making it a federal crime for an Olympic sports official to not immediately report allegations of child abuse.

Dominique Moceanu, a 1996 Olympic gold medalist, was among those who called Penny’s resignation a step toward making the sport more athlete focused. Last month, in an exclusive interview with IndyStar, Moceanu became the highest profile former gymnast to publicly call for Penny’s departure.

On March 3, a Georgia judge released 54 secret files USA Gymnastics had kept on coaches accused of sexual abuse. The files were submitted as evidence in a lawsuit against USA Gymnastics.

The USA Gymnastics board previously had been steadfast in its public support of Penny. But one observer familiar with the story said the organization had little choice but to act. “This could have destroyed the organization if it hadn't been handled correctly,” said Jonathan Bernstein, president of California-based Bernstein Crisis Management.

Penny's decision and the input from the USOC were both meant to put the controversy behind Olympic sports. “My decision to step aside as CEO is solely to support the best interests of USA Gymnastics at this time," Penny said in a statement.

Penny, 53, said he and others in the organization's leadership "care deeply about the safety of our athletes."

"It has been heartbreaking to learn of instances of abuse," he said, "and it sickens me that young athletes would be exploited in such a manner."

IndyStar’s investigation revealed a top-down culture in the sport that insiders said placed medals and money over the welfare of athletes — a system where some gymnasts said complaints about all kinds of abuse were not always taken seriously and where those who spoke out against the leadership faced intimidation or ostracism.

Moceanu, the youngest U.S. gymnast to win a gold medal, said Penny's resignation is not the solution to longstanding problems.

“There still is a lot more work that needs to be done,” she said Thursday. “This is the first step of many that need to occur.”

Moceanu said the board needs to apologize to athletes and abuse victims, many of whom have never come forward because of a culture of fear within the sport. The organization also needs leadership that is open, transparent and puts the welfare of athletes ahead of everything else, she said.

“This is a chance to make an honest, fresh start,” she said. “The board has never really addressed the athletes and victims. They may not have been at fault, but they supported him for so long and the athletes deserve better.”

California attorney John Manly, who is suing Penny and USA Gymnastics on behalf of dozens of alleged victims of Nassar, also said Penny's resignation is not the end of changes that are needed.

"The tacit culture of acceptance of child sex abuse was fostered not just by Mr. Penny but many of the long-term members of the board," Manly said. "Make no mistake: This resignation is the result of the brave women who publicly spoke out about their sexual assault at the hands of Dr. Larry Nassar's abuse and the many other coaches who savaged children while USA Gymnastics looked the other way."

One of those women was Rachael Denhollander of Louisville, who came forward to IndyStar after the first story in its investigation last August. Denhollander alleged that years earlier she had been sexually abused by Nassar. After Denhollander came forward, more than 80 others contacted law enforcement about Nassar.

Nassar is facing sexual abuse and child pornography charges and is in jail in Michigan. He has denied the allegations.

Denhollander also saw Penny's resignation as a first step.

"I am disheartened to see that there still has not been a recognition of the deep failures that allowed so many children to be abused while participating in USAG gymnastics," Denhollander said. "Many have pointed out the serious errors in how USAG has handled the question of sexual abuse for decades, but USAG still has not taken responsibility for, or even admitted, those failures and the serious ramifications they have had."

Women's sports advocate and attorney Nancy Hogshead-Makar, a three-time Olympic gold medalist in swimming, agreed that more needs to be done.

"The power of the coach and administrators must be checked," she said. "Athletes must be able to assert boundaries and say no to all sorts of abuse without fear of retaliation."

In the midst of the IndyStar investigation, USA Gymnastics hired former federal prosecutor Deborah Daniels to review its policies and make recommendations for changes. At the same meeting where the board accepted Penny's resignation, it also amended its bylaws to conform with policies of the U.S. Center for SafeSport, which opened last month and will assume responsibility for investigating complaints about sexual and other abuse in Olympic sports.

"We believe Ms. Daniels’ recommendations will identify areas where we can strengthen and refine how we handle sexual misconduct as an organization, expand our efforts to educate the entire community, including parents and athletes, about what to watch for and what to do if they suspect abuse is happening," said Parilla, the USA Gymnastics board chairman. "Everyone can be an active and vigilant participant for this to be effective, not only in gymnastics but also the Olympic movement as a whole."

Parilla, who has been on the board for 17 years, will lead a national search for a new president and "guide the organization's operations and move forward the initiatives currently in progress to strengthen and refine its policies and procedures for handling sexual misconduct."

Penny, who came to USA Gymnastics in 1999 as vice president of marketing, oversaw a major financial upswing for USA Gymnastics, which was nearly broke when it moved from Texas to Indianapolis in 1983. His tenure also included the greatest success of the women's teams in international competition. Those accomplishments helped Penny earn $628,000 in 2015, according to the most recent public tax documents. A USA Gymnastics spokeswoman declined to reveal the financial terms of Penny's resignation.

But pressure has grown since USA Gymnastics admitted in February that it had waited five weeks to report Nassar to the FBI while conducting an internal investigation. Penny — who has been personally responsible for handling sexual abuse complaints since becoming president in 2005, according to his sworn testimony in a Georgia lawsuit — and the organization denied responsibility for Nassar's alleged crimes and emphasized they first reported him to the FBI.

The USOC board stepped into the fray last week, when it called on Penny to resign.

Bernstein, the crisis management expert, said there appeared to be no other viable course for the board.

“Given that there appeared to be many years of this kind of abuse taking place, the person in charge during that period has to accept responsibility,” Bernstein said. “Nothing short of resignation — or being fired — would be a full acknowledgement of that level of responsibility.”

Another important step toward changing the culture in such cases, he said, is to get rid of any employees with direct or indirect culpability in the sex abuse scandal. An independent investigation would ensure the board and the public that remaining employees were not part of a problem.

"Their future reputation hinges very much on how thorough they are cleaning house," Bernstein said. “It’s the board’s reputation on the line.”

And the board, he said, is often the right place to turn for leadership. Having a member of the board lead in the interim — in this case, chairman Parilla — is a common step if a member of the organization’s leadership is accused of wrongdoing.

“Having someone who wasn’t part of the day-to-day workings, and therefore is highly unlikely to be part of the problem, is a reason for having someone off the board step in,” Bernstein said.

USA Gymnastics said no investigation of remaining employees is planned.